The damage and reconstruction of the Kumamoto earthquake : an analysis on the impact of changes in expenditures with multi-regional input-output table for Kumamoto Prefecture

The Kumamoto earthquake which occurred in April 2016 measured twice the maximum seismic intensity of 7, causing serious damage to the Kumamoto Prefecture. This study mainly focuses on the demand side of expenditures, estimating the monthly expenditures for 1 year before and after the earthquake. Then, using the multi-regional input-output table for Kumamoto Prefecture, we analyzes the ripple effects by region of the changes in monthly expenditures due to the earthquake. Expenditures in the prefecture in fiscal year 2016 by month decreased by a cumulative total of 592 billion yen because of the earthquake, which generated a value-added loss of 348 billion yen. On the other hand, expenditures increased by a cumulative total of 648 billion yen caused by reconstruction demand, inducing 375 billion yen in value-added gains. Thus, net increase of the value-added of 27 billion yen occupied 10.9% of net increase of the gross prefectural domestic product between fiscal years 2015-2016. The fluctuation of expenditures, induced production, and induced value-added caused by the earthquake is huge. Although the damage to the prefectural economy was severe, reconstruction demand exceeded it, resulting in a quick recovery. However, at the same time, there was a confirmed delay in restoration in industries that were almost unrelated to reconstruction and in regions with a heavy concentration of damage.